Women-led startups get inside help

Monday

Mar 4, 2013 at 6:00 AM

Peter S. Cohan Wall & Main

Women are in the startup arena, but are they generating returns for investors? My Feb. 21 interview with a woman who invests in such startups offers insights into how they are playing the startup game.

Joanne Wilson, an investor in 31 startups — 70 percent of which are women-run — revealed her thoughts on why she likes to invest in women entrepreneurs and how she helps them.

Mrs. Wilson, wife of Union Square Ventures managing partner Fred Wilson, is an angel investor. She boasts, “I haven’t lost one in six years.” Many of her stakes are in technology companies connected to the food industry. Mrs. Wilson said she has “always enjoyed cooking and baking.”

But according to Women in Technology International, while the number of women who run small businesses runs at roughly 50 percent, women who run high-tech startups is in the low single-digit percentage. That means that while women in startups tend to be successful, there is only a very small sample to measure.

Mrs. Wilson loves to have lunch and dinner with entrepreneurs, and thanks to her 10 years of blogging, she gets leads for new investments “from her inbox,” as well as meeting talented women at the annual women’s entrepreneur conference that she co-chairs and that is run by NYU’s ITP department.

In Mrs. Wilson’s view, women start businesses “to fill a void in their lives. Men don’t.” Citing the example of ZipCar founder Robin Chase, Mrs. Wilson said, “I can imagine she was thinking, ‘It would be so great if I could walk out the door and jump into a car.’ She was trying to make her life easier.”

By contrast, she cites Twitter and Tumblr as examples of male-led startups that don’t meet deeply felt needs. Men think about the businesses that they want to build differently.

Mrs. Wilson believes that women are more detail-oriented than men, which can lead them to be very careful about taking risks. As she explained, “Women cross all the t’s and dot all the i’s. They are not so on-the-fly. That can be a good thing and a bad thing.”

She comes from a long line of women with strong instincts about ideas that will be big in the future. “I am a generalist, and, like my grandmother and my mother, I have a good gut. I invest in different industries and bet on the entrepreneur. I don’t need to look at the numbers because they never come true. I believe in these women. Every one will be a success at some level.”

Mrs. Wilson mentors her companies by hiring new executives, helping them find a business model and pushing them to make short-term progress toward their long-term goals.

She said she meets “incredible women who are looking for the next things,” and she interviews them and helps connect them to the startups in which she’s invested.

“These days, investors don’t just care about traction and engagement, they care about revenues. I push companies to prove they have a business model. Even if they are not covering their monthly burn, I ask them to explain, ‘How are we gonna make money?’ And I encourage them to spend money so they can find out whether their business model works.”

In addition to making introductions to potential customers, Mrs. Wilson requires her companies to meet with her and other advisers every six weeks to think about how short-term tactics will lead to achieving long-term goals.

She wants her entrepreneurs to “think out of the weeds, to make sure that they are working on the right things.”